Mexican Peso Slips as Markets Await Fed Cuts, Stocks Hit New Highs

Monday morning brought mixed fortunes for Mexican financial markets. Banco de México confirmed stable policy rates overnight, but the peso weakened to 18.75 per dollar in early Asian trade before recovering to 18.71 at the close.

The drop followed U.S. ADP data that showed private payrolls rising by just 54,000 in August, below forecasts, and JOLTS openings falling to 7.18 million. Traders now price in a 95 percent chance of a September Fed rate cut, softening dollar demand.

The S&P/BMV IPC index climbed 0.36 percent to a record 59,868 points, led by gains in industrial and telecom stocks. The index added 0.20 percent in the past 24 hours on volume of 162 million shares.

Mineras Frisco and América Móvil topped gainers, rising 1.5 percent and 1.2 percent respectively. On the losers’ board, Cemex and Grupo Aeroportuario fell 1.1 percent and 0.8 percent, weighed by lower global commodity prices and airlines’ weaker outlook.

Technical indicators on the daily peso chart spotlight a bearish bias. The 20-day Bollinger Bands narrowed, signaling low volatility but warning of a pending breakout.

The peso trades below its 50- and 100-day EMAs at 18.70 and 18.82, confirming downward pressure. The 14-day RSI sits at 48, near neutral but tilted lower.

MACD lines remain below zero, though they converge, hinting at a possible shift. Traders watch support at 18.65 and resistance at 18.80 for the next move.

The Global Liquidity Index (yellow line) edged down, reflecting cautious capital flows out of emerging markets. Volume spikes accompanied each major intraday move in peso futures, validating price shifts.

Fibonacci retracements from the August high at 18.90 to the 18.55 low highlight a 61.8 percent retracement near 18.75, which the peso briefly breached.

ETF flows into Mexico’s largest equity vehicle registered mixed activity. The iShares MSCI Mexico ETF saw average daily volumes of 1.38 million shares over the past three sessions, with net inflows of $8.2 million on Friday.

That contrasts with a $4.5 million outflow the previous week, suggesting renewed investor interest amid global yield declines. Remittances data added to market unease.

July receipts fell 4.7 percent year-on-year to $5.33 billion, marking the largest decline since 2009. This contraction chips away at domestic consumption support for the peso.

Investors now focus on upcoming Banxico minutes and U.S. nonfarm payrolls. A stronger-than-expected U.S. jobs print could reinforce dollar strength, while Banxico’s caution will constrain local yields.

For now, the peso’s path will hinge on Fed signals and remittance trends, while stocks ride domestic resilience against external headwinds.